Thursday, February 23, 2017

Delay in construction of expressway costing the country Rs 8 billion annually

The government is starting construction of Nepal's first expressway very soon as the delay has been costing the country dearly, according to minister for Physical Infrastructure and Transport Ramesh Lekhak.
Speaking at the meeting of Parliamentary Accounts Committee (PAC) today, Lekhak said that he would forward the proposal to start construction of the Kathmandu-Tarai Expressway in the cabinet very soon.
The delay in construction of the express highway has been costing the country more than Rs 8 billion every year. Due to recurring controversies and delays, the project’s original cost estimate of Rs 56 billion has doubled to Rs 112 billion in seven years, which means the price tag has been swelling by Rs 8 billion annually after adjusting for inflation.
The minister also told the parliamentary committee that the government would set up a special purpose vehicle to build the expressway as per the report of the Study Committee led by National Planning Commission (NPC) vice chair Dr Min Bahadur Shrestha.
The committee led by Shrestha has recommended to the government set up a separate mechanism for construction of the expressway.
He also informed that the ministry is dealing with three processes simultaneously – resource management, procurement model and establishment of a separate mechanism to execute the five-year project in line with the recommendation of a government committee.
“We will soon prepare a project modality and table it at the Cabinet," he said adding that that a separate mechanism would be formed to execute the ‘public expressway’ as it could be a ‘reference document’ to call for bids under the EPC model. "The report will be used as a bill of quantities (BOQ), a document usually used in tendering in construction projects."
However, the Indian firm IL&FS has sought Rs 600 million from the government for the DPR.
The 76-km expressway that connects Kathmandu with Tarai-Madhesh in just an hour can be split into at least two sections to procure contract services, the study committee had suggested, recommending to build the first of its kind of expressway in Engineering Procurement and Construction (EPC) modality to save time and money.
Speaking at the meeting, transport secretary Dhan Bahadur Tamang told the parliamentarian that the 76-km expressway project may go for the EPC model instead of the build own operate transfer (BOOT) model proposed earlier.
The EPC contract binds the contractor to deliver the project at a stipulated time with predetermined price regardless of any increase in cost that the contractor may incur after the contract is signed.
Once the contract for the project is awarded, the contractor will prepare a detailed engineering report which will ascertain the real cost. The IL&FS – in its DPR submitted to the government in 2015 – had estimated Rs 112 billion, whereas a study conducted by the Asian Development Bank (ADB) in 2008 had estimated the project to cost Rs 56 billion. The cost was revised to Rs 96 billion in 2014.
One of the reasons for the project's delay is also the recurring controversies regarding the price tag.
In the meeting too, a number of lawmakers said that the cost estimate for the scheme was unrealistic.
Lawmaker and former finance minister Bishnu Poudel, on the occasion, said the government should agree to the EPC model and invite bids immediately. "We need to prepare a time-bound calendar to successfully execute the project," he said, warning that it will remain a distant dream, otherwise.
The government has recently announced that it will construct the highway by allocating around Rs 20 billion every year for five years.
Poudel also asked the government to immediately start the construction of the highway without further delay according to the previous government's plan. "The previous government had also allocated Rs 10 billion budget for the expressway," he added.
Poudel as the finance minister – in the erstwhile government led by KP Sharma Oli – had allocated Rs 10 billion for the project in the current fiscal year. But the budget has not been spent at all because of the delay in finalising project development and financing modality.
However, the National Pride Project has not been able to spend its budget due to various technical problems including dispute in compensation for land to be acquired for the project.
Kathmandu-Tarai-Madhesh expressway project chief Satyendra Shakya said that the change in construction modality has also delayed the project.
Lawmaker Ramhari Khatiwada said Nepal’s roads were being used as trial and we should be careful on whether the fate of the expressway would be like that of the BP Highway, a section of which crumbled a couple of days ago.
Likewise, the Lawmakers, on the occasion, demanded the government to expedite the construction of Kathmandu-Tarai-Madhesh expressway as it will be a milestone in the country's transportation network and can cut transportation cost, fuel consumption and time taken for transporting goods and traveling significantly that would also strengthen the national unity, the committee opined.
Concluding the meeting PAC chairperson Dor Prasad Upadhyay said the next meeting is expected to discuss the issues of the expressway again and come up with a substantive decision on the matter.

Track to be opened to motor traffic
The Department of Roads said that it was planning to open the track of the proposed Kathmandu-Tarai-Madhesh expressway to motor traffic. Director general of the department Devendra Karki said that they had been conducting repairs at Chhaimale, Dakshinkali and Nijgadh to allow vehicular movement. The Nepal Army started work to open a track in 2009 November as per the government’s instructions. It was completed in 2013.